Legal team highlights cautionary clinical laboratory fraud case

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Attorneys at Robinson and Cole in Boston have highlighted a complex False Claims Act case in the District of Massachusetts that they have called a cautionary tale to relators.

The firm said via LinkedIn that the case tested theories of liability that have been used for years in False Claims Act prosecutions related to medical necessity of clinical laboratory testing and commissions to independent contractor marketers. Seth Orkand noted that "the ruling serves as a cautionary tale to relators about the significance of their own conduct." 

Omni Healthcare (the relator, on behalf of the U.S.) versus MD Spine Solutions dba MD Labs dates back to 2018, a settlement agreement in 2022, and an amended complaint filed May 28, 2023. In the qui tam lawsuit, Omni again attacked MD Labs and its owners over urinary tract infection (UTI) panel testing, the lab's requisition forms, sales conduct, and billing. 

Omni alleged that MD Labs and its owners submitted thousands of fraudulent claims to Medicare, Medicaid, and other federal and state-funded health care programs and commercial insurers for what they said were medically unnecessary, kickback-induced, and otherwise improper claims for clinical laboratory services. Omni, a multispecialty medical practice based in Florida, hoped to recover damages and civil penalties on behalf of numerous U.S. states. 

However, on January 6, U.S. District Judge Patti Saris granted summary judgment in favor of MD Labs and its owners. Evidence Omni put forth was insufficient to raise a triable issue that MD Labs submitted claims for PCR UTI tests knowing that the performance of the PCR testing was medically unnecessary, Saris noted. In addition, reliance on a set of guidelines from the American Urological Association (AUA) was unconvincing. 

Furthermore, the record did not support a reasonable finding that any independent-contractor sales representative engaged in conduct that improperly or unduly influenced a provider’s decision to purchase the product. 

"In sum, no reasonable jury could conclude on this record that Defendants knew that they were submitting claims for PCR UTI testing that was medically unnecessary," the decision stated, adding that no reasonable jury could find on the record that the submission of claims for PCR UTI testing resulted from the alleged Anti-Kickback Statute violation. "Relator’s allusion to other possible theories of liability cannot save its case at this juncture," the judge said. 

MD Labs' motion for summary judgment was allowed, and Omni's motion for partial summary judgment was denied.

Robinson and Cole's team that includes Orkand, Danielle Tangorre, and Edward Heath has been monitoring clinical laboratory litigation that indicates a growing trend of cases filed by nontraditional whistleblowers, such as insurance carriers, activists, investors, and special-purpose entities created solely to file litigation.

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